Activity Purchase Orders Inspections Assembling Purchasing Inspections Assembling Cost Driver No. of Purchase Orders No. of Receiving Reports No. of Parts Estimated Total Driver Overhead Volume $ 150,000 2,500 $ 400,000 1,500 4,000 4,000 $ 200,000 Cost Drivers by Product Product Club Product Chub 1,000 6,000 4,000 10,000 8,000 You expressed agreement with the new Production Manager and was asked to present results for the following for the month of August 2022. Required: a. Compute the predetermined overhead rate for each cost pool. b. Compute total cost assigned for Purchase Orders, Inspections and Assembling costs assigned to each product, using activity-based costing. c. Compute the cost per unit for each product.
Activity Purchase Orders Inspections Assembling Purchasing Inspections Assembling Cost Driver No. of Purchase Orders No. of Receiving Reports No. of Parts Estimated Total Driver Overhead Volume $ 150,000 2,500 $ 400,000 1,500 4,000 4,000 $ 200,000 Cost Drivers by Product Product Club Product Chub 1,000 6,000 4,000 10,000 8,000 You expressed agreement with the new Production Manager and was asked to present results for the following for the month of August 2022. Required: a. Compute the predetermined overhead rate for each cost pool. b. Compute total cost assigned for Purchase Orders, Inspections and Assembling costs assigned to each product, using activity-based costing. c. Compute the cost per unit for each product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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step by step explanation please.
Transcribed Image Text:Radix Industries manufactures two products, Club and Chub. Over the years, they practiced
traditional costing. A new Production Manager was hired and is surprised that the company
still uses that old method. She recommends Activity Based Costing (ABC) system to the Board
of Directors. The following information is available for review:
Transcribed Image Text:Activity
Purchase Orders
Inspections
Assembling
Purchasing
Inspections
Assembling
Cost Driver
No. of Purchase
Orders
No. of Receiving
Reports
No. of Parts
Estimated Total Driver
Overhead Volume
$ 150,000
2,500
$ 400,000
1,500
4,000
4,000
$ 200,000
Cost Drivers by Product
Product Club Product Chub
1,000
6,000
4,000
10,000
8,000
You expressed agreement with the new Production Manager and was asked to present results
for the following for the month of August 2022.
Required:
a. Compute the predetermined overhead rate for each cost pool.
b. Compute total cost assigned for Purchase Orders, Inspections and Assembling costs
assigned to each product, using activity-based costing.
c. Compute the cost per unit for each product.
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